In 2021, Great-West Lifeco (‘Lifeco’) committed to achieving net-zero emissions within its General Account by 2050, which represents $250 billion in insurance premiums it invests to cover future liabilities as of 2023. It followed this by setting a 2030 financed emissions reduction target and improving its financed emissions reporting.

Lifeco also has exposure to climate risks via the larger AUM it invests for third parties; however, its GA is a logical starting point for its net zero transition.

In its latest CDP disclosure, Lifeco reveals $25 billion – over 10% – of its GA is invested in fossil fuels (1). Beyond transition risks, these investments represent further risk to Lifeco’s core business. Insurance sector think tank the Geneva Association acknowledges the role of fossil fuels in contributing to millions of deaths each year due to air pollution, and that “[c]limate change will exert a huge toll on human health, via direct fatalities from extreme weather events as well as adverse effects on morbidity.” (2)

Lifeco also reports $6.5 billion invested in renewable energy, less than 3% of its invested assets (3). To align with net zero, Bloomberg NEF recommends a 4:1 ratio of clean to fossil fuel energy (4). Currently, Lifeco’s GA represents nearly the inverse.

To date, Lifeco’s disclosures leave shareholders in the dark regarding concrete, short-term steps it will take to meet its net zero target – essential for a credible transition plan (5). Examples of industry best practices include:

Setting climate solution investment targets, as Allianz has done. (6)
Adopting escalating engagement strategies with carbon-intensive portfolio companies, like Group Generali, which specifies transition strategy expectations of portfolio companies and escalation tactics, including opportunistic divestment if engagement proves unsuccessful. (7)
Setting fossil fuel investment policies, as Manulife implements within its GA for thermal coal (8), AXA has across its investments in relation to coal and oil sands (9), and Group Generali has for new investments in oil and gas companies without transition plans. (10)
Lobbying governments for economy-wide transition policies, like Aviva has committed. (11)
Shareholders are further concerned that disclosure gaps in Lifeco’s transition plan may represent compliance risk regarding OSFI’s Climate Risk Management Guidelines. (12)

P.286 at www.greatwestlifeco.com/content/dam/gwlco/documents/reports/2024/great-west-lifeco-cdp-climate-change-questionnaire-2024.pdf.
P.9 at www.genevaassociation.org/sites/default/files/2024-02/cch-report_web-270224.pdf.
IP.53 at www.greatwestlifeco.com/content/dam/gwlco/documents/reports/2024/great-west-lifeco-cdp-climate-change-questionnaire-2024.pdf.
https://about.bnef.com/blog/the-magic-number-is-4-to-1-as-banks-warm-to-clean-energy-finance-ratio/
IFRS, Transition Plan Taskforce Asset Owner Guidance (2024) at 28-25.
www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/sustainability/documents/Allianz_Inaugural-Net-Zero-Transition-Plan.pdf
Ibid, at 4-5.
www.manulife.com/content/dam/corporate/global/en/documents/pas/MFC_2023_CAIPR_EN.pdf
www.axa.com/en/commitments/axa-and-climate-change
Generali Group, Climate Change Strategy, Technical Note (Oct. 2024) at 4.
www.aviva.com/sustainability/taking-climate-action/sustainable-finance/
www.osfi-bsif.gc.ca/en/guidance/guidance-library/climate-risk-management